Brookfield Seeks to Restructure Offer for GGP -- WSJ
December 23 2017 - 3:02AM
Dow Jones News
By Dana Mattioli
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 23, 2017).
Brookfield Property Partners LP is working to restructure its
offer for the shares of mall owner GGP Inc. that it doesn't already
own, according to people familiar with the matter.
Last month, the private-equity firm made a public offer worth
$14.8 billion, or $23-per-share, for the 66% of GGP it doesn't
already own. The offer was half in cash and half in equity.
GGP has pushed back on the offer, wary of accepting Brookfield
stock in its current form, some of the people said.
Now, the real-estate investor is considering two options to
change its proposal.
In one, Brookfield would create a new form of stock to use as
consideration, the people said. It would be equity in an entity
created by hiving off some of Brookfield's properties and combining
them with GGP. It isn't clear which Brookfield properties those
would be. GGP shareholders also would get cash. It isn't clear
whether that would be the same amount as in the current offer or
not.
In the other option, Brookfield would bump the cash component
and continue to offer its stock, some of the people said.
Brookfield is talking to other investors about providing additional
cash to support this option.
It isn't clear what either new bid would be worth.
It is possible Brookfield will decide against either option or
that it could restructure the deal in a different way, some of the
people said.
Shares of Chicago-based GGP, formerly known as General Growth
Properties, were trading just above $23 Friday afternoon in a sign
that investors are betting that a sweeter offer could come.
The company owns around 125 high-end retail centers around the
U.S., including Tysons Galleria near Washington, D.C., Glendale
Galleria outside Los Angeles and Chicago's Water Tower Place. The
company emerged from bankruptcy in 2010 with backing from
Brookfield and other investors.
Brookfield Property owns or operates office properties, retail
centers and multifamily housing units among about $68 billion in
total assets. The firm is part of Brookfield Asset Management, a
Canadian alternative-asset manager with more than $265 billion
under management, including about $150 billion in real estate. Its
portfolio includes London's Canary Wharf and Brookfield Place in
lower Manhattan.
If a deal is reached, it would come at a tough time for mall
operators, which are struggling to adapt to the migration of
shoppers to the web.
GGP operates so-called A malls, premium properties that house
movie theaters, restaurants, ice-skating rinks and other
entertainment venues alongside traditional retailers. While its
properties have held up better than lower-end malls, it has made
some changes to adapt to shifting consumer behavior.
Like other mall operators, GGP has taken back spaces from dozens
of department stores that no longer draw the heavy foot traffic
they once did, replacing them with gyms, high-end grocery stores or
fast-fashion retailers.
Part of the rationale of the proposed deal would be to help the
mall operator add features to its properties, such as office space,
entertainment and apartment blocks.
Write to Dana Mattioli at dana.mattioli@wsj.com
(END) Dow Jones Newswires
December 23, 2017 02:47 ET (07:47 GMT)
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